Fed holds interest rates steady, but a December hike is on the cards

Courtney Goldsmith
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Janet Yellen Addresses The Economic Club Of New York
Janet Yellen will be replaced as Fed chair next year (Source: Getty)

The US Federal Reserve decided to keep interest rates unchanged but gave hints it would raise rates in December due to strong economic growth.

The move to hold the federal funds rate, at which the Fed lends to other banks, at a target range of one to 1.25 per cent was widely expected, and markets were largely unaffected after the announcement.

Following the two-day policy meeting, the Fed said inflation for items other than food and energy had remained "soft", but it did not downgrade its expectations.

Read more: Why the Fed's 'quantitative tightening' will be held back

“The labour market has continued to strengthen and ... economic activity has been rising at a solid rate despite hurricane-related disruptions," the US central bank said.

The Fed has raised benchmark borrowing rates twice this year.

Analysts were more interested in the naming of a new Federal Reserve chair to replace Janet Yellen, which is expected to be announced by President Donald Trump tomorrow. Fed governor Jerome Powell is seen as the frontrunner.

Read more: Federal Reserve inflation rift remains but rate rise is still on the cards

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